I. Introduction

In September of 2001, the citizens of Oklahoma overcame powerful union opposition to approve a "right-to-work" provision for their state constitution. "Right-to-work" laws are state statutes or constitutional provisions that ban the practice of requiring union membership or financial support as a condition of employment. This successful campaign made Oklahoma the 22nd state to achieve right-to-work (RTW) status since this option was assured under the Taft-Hartley amendments to the National Labor Relations Act in 1947.

The Oklahoma story is only the latest evidence of a growing interest in reassessing the costs and benefits of the compulsory union regime spawned during the Great Depression, and which remains today one of the primary determinants of labor productivity. With increasing global competitiveness taking a toll on U.S. manufacturing jobs, and state governments and municipalities struggling to achieve greater operating efficiencies in the face of declining revenues and increasing costs, the consequences of compulsory unionism are universally important.

Today labor union membership is at its lowest point since the 1950s. Eighty-four percent of Michigan's private sector workers (and 91 percent nationwide) pay no dues to any union; they either work for themselves or negotiate individually with employers, and manage for the most part to do rather well. In Michigan's manufacturing sector, however, which is a critical component of our economic vitality, 29.2 percent or 305,900 manufacturing employees are represented by unions. In addition, Michigan is home to 350,000 unionized state and local government employees, constituting 56.2 percent of the public sector workforce. Total union membership stands today at 972,000, or 21.8 percent of all workers employed in Michigan during 2001.

Advocates of right-to-work laws point toward a growing body of evidence showing faster economic and employment growth in right-to-work states. This growth advantage-experienced predominantly by the southern and western states, which comprise the bulk of right-to-work states-has been in evidence since the passage of the Taft-Hartley Act in 1947.

Opponents of right-to-work laws, conversely, maintain that compulsory union support is vital to organized labor, which protects workers from the negative aspects of big business and market economies. In this view, firms seeking to maximize profits at the expense of rank-and-file workers are responsible for the slowdown in real earnings and the growing income inequality over the past quarter century.

To evaluate the merits of these arguments, this study compares economic development between RTW states and non-RTW states by examining a broad cross section of economic statistics from the past three decades. The results of this analysis challenge many of organized labor's long-standing contentions. Particular attention is paid to Michigan's economic performance.

Section II provides an overview of compulsory unionism and RTW statutes as background for the economic analysis that follows. Section III provides a brief review of the literature on the impact of RTW laws. Section IV gives a geographical breakdown between RTW and non-RTW states. Section V discusses how globalization is impacting union activity. Section VI compares RTW and non-RTW states using nine economic measurements. The final section summarizes the results.

Some highlights from the economic analysis are summarized below:

From 1970 through 2000:

  • RTW states' economies grew one-half percent faster annually.

  • RTW states created 1.43 million manufacturing jobs; non-RTW states lost 2.18 million manufacturing jobs.

  • RTW states have greater disposable income growth.

  • RTW states have lower unit labor costs.

  • RTW states' poverty rates are falling faster.

Michigan's performance:

  • Annual economic growth averaged one-half the rate experienced by RTW states.

  • The state lost over 100,000 manufacturing jobs since 1970.

  • Annual construction employment growth was a full percent below that of RTW states.

  • The state had the second highest unit labor costs in the nation.

  • The poverty rate rose.